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08.06.11

Treasury Protests Downgrade

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The Obama administration harshly criticized S&P's decision to lower its rating on long-term U.S. debt, saying the move was based on a flawed estimation of the national debt by about $2 trillion. “A judgment flawed by a $2 trillion error speaks for itself,” a Treasury spokeswoman said. When the Treasury pointed out the error Friday night, the S&P confirmed it was wrong, but proceeded to downgrade the country's rating anyway. The downgrade may prompt investors to demand higher interest rates from the government, but many analysts say the effect will be minimal provided the other ratings agencies don't follow S&P's lead.